Marketing Advantage Over Regulatory Arbitrage
Allan Stone, CEO of Intelitics, told European Gaming that the rapid growth of prediction markets in the United States is primarily a marketing phenomenon rather than a regulatory one. Stone, whose marketing intelligence platform is based in Costa Mesa, California, analyzed the performance of Kalshi during the 2026 World Cup to argue that the platform’s success stemmed from superior execution in user acquisition and brand visibility.
“Fifteen people beat companies with a hundred times their headcount,” Stone said, referencing Kalshi’s lean team structure compared to established operators. During the tournament, Kalshi recorded almost 6 million app downloads, a figure Stone noted exceeded the trading volume of most sportsbooks’ entire handles. The platform also landed on a brand momentum list ahead of the television network that broadcast the World Cup games.
Shifting Demographics and User Behavior
Stone highlighted a significant demographic shift in Kalshi’s user base, noting that female users grew at almost double the rate of male users during the tournament. By late June, women made up close to a third of Kalshi’s traders. This stands in contrast to sportsbooks, which have historically maintained female user bases in the low 20s percentage range.
“Better marketing did [this],” Stone said, attributing the demographic breakthrough to targeted promotional efforts rather than the regulatory environment. He pointed out that prediction market traders behave differently than traditional sports bettors, checking probabilities across a news cycle rather than following game clocks. This behavior requires operators to adapt their marketing and retention strategies to capture users who may not place traditional wagers.
Financial Impact on Established Operators
The rise of prediction markets is straining the budgets of major sportsbooks. DraftKings and FanDuel are projecting more than $500 million combined in lost EBITDA this year from building and marketing prediction products. BetMGM’s CEO stated that prediction markets are pulling marketing dollars from the same channels, pushing acquisition costs higher for traditional operators.
PENN’s CEO described the upcoming competition before football season as an “arms race” and “irrational.” Stone warned that operators not directly competing with these new entities still face rising costs. “If you’re not one of the three companies in that fight directly, your CPMs go up anyway,” he said, noting that operators are bidding in the same auctions as well-funded prediction markets that are not optimizing for the same payback windows.
Regulatory Landscape and Future Outlook
While regulation plays a role, Stone estimates that the gap between prediction markets and sportsbooks is one-third regulatory and two-thirds self-inflicted marketing issues. In the United States, prediction markets operate under federal Commodity Futures Trading Commission (CFTC) oversight, while sportsbooks operate under state-by-state licensing. Sixteen U.S. states took action against sports-related event contracts last year, and the American Gaming Association (AGA) estimates lost state and tribal revenue from prediction markets at $1 billion.
In Europe, nine regulators from Belgium, France, Germany, Italy, the Netherlands, Poland, Portugal, Spain, and Switzerland have coordinated against unlicensed prediction platforms. The UK Gambling Commission classifies platforms like Kalshi as betting intermediaries in Great Britain, similar to how Betfair has been regulated as a betting exchange since roughly 2000.
Stone advised operators to treat lifetime value figures from this new category as hypotheses rather than benchmarks. “The honest move for 2027 budgeting is to treat any LTV figure you hear from this category as a hypothesis, not a benchmark, until someone’s watched a cohort for a full year without a tentpole event propping it up,” he said. He concluded that the industry must adapt to a competitor that moves like a newsroom, challenging the traditional planning models of established sportsbooks.
Why It Matters
For iGaming operators, the shift toward prediction markets signals a fundamental change in user acquisition costs and demographics. Established sportsbooks face rising CPMs and potential EBITDA losses as they compete for attention with leaner, more agile platforms. Regulators in both the U.S. and Europe are adjusting frameworks to address this new product category, creating a complex compliance landscape that affects market entry and operational strategy.
David Farbacu is a seasoned writer with a passion for games, gaming, casinos, and Xbox. With a wealth of experience in the industry, David brings insightful reviews, comprehensive guides, and engaging articles that cater to both casual gamers and hardcore enthusiasts. His expertise spans across various gaming platforms and genres, making him a go-to source for the latest trends and developments in the gaming world.
